The three key ingredients for hospitality venues to thrive in 2024

We’ve entered another exciting yet challenging year for Australia’s vibrant hospitality sector. Tough economic conditions mean venues must cater to the ever-changing needs of consumers. Crucially, this is not just from a product or service standpoint but factors such as sustainability initiatives, which will play a key role in attracting and retaining customers. Serving excellent food and drink is important, but businesses must not underestimate the wider ethical practices that today’s customers judge a venue on.

Sustainability is on the menu

Aussie consumers are becoming increasingly concerned about the environment. Whether it is what they wear, where they shop or the food they eat, people are making more conscious decisions about how sustainable they can be. Bain & Company recently reported that 78 percent of Australians were willing to pay a premium for sustainable products, signalling a shift in priorities for consumers where sustainability outweighs cost.

Lightspeed’s 2024 Hospitality Insights and Dining Dynamics report found that the vast majority (85%) of Australian hospitality businesses believe implementing environmentally friendly initiatives will attract more customers. This sentiment of bar, hotel and restaurant owners is shared by Australian consumers with 34% stating that they want to see more sustainable food sourcing, this could be either with local or seasonal ingredients included on the menu. As a result, hospitality businesses have already implemented a number of greener initiatives which include going paperless (37%), using recyclable cutlery and packaging (36%), serving organic or farm-fresh produce and offering customer incentives for using reusable products (35%). To align with consumer expectations, more hospitality businesses need to find ways to implement such initiatives.

Knowing your customer

Staying on top of menu trends is an imperative for operators. It's important for businesses to offer the products and services consumers want. Our data revealed the top trends diners are expecting in 2024, these include: Sustainable food sourcing (34%), bottomless drinks (22%), catering to dietary requirements (20%) and alcohol-free beverages (18%). Other important considerations are fusion food, limited edition menus, vegan or plant-based items and functional foods.

We also asked operators what trends they believe their customers are expecting. Vegan or plant-based items (31%), sustainable food sourcing (30%), functional foods (27%) and fusion food (27%) made the top four. Catering to dietary requirements, limited-edition menus, bottomless drinks and alcohol-free beverages followed.

Disparities between the priorities of hospitality operators and consumers are evident in the analysis of two prominent trends—vegan or plant-based items and bottomless drinks.

Hospitality operators placed importance on vegan or plant-based items, ranking them at the forefront of their considerations, whereas consumers positioned them in the seventh position. Conversely, bottomless drinks, a trend ranked second by consumers, was a distant seventh for operators.

Whilst the majority of trends noted by consumers and operators mirror one another, it's really important businesses continue to align themselves to their customers’ needs and wants. This is where data can be used to full effect to help with product forecasting and meeting expectations.

Leveraging technology to improve processes

As the cost of living increases and inflation levels affect the sector, the hospitality industry must leverage technology to not only improve the customer experience but to streamline operations and save on costs.

In the last year, 37% of restaurants, bars and cafes have had to change menu items. A further 35% have had to change or re-negotiate with suppliers and 32% stated they had to let staff go. Prices have also had to rise with 29% of venues revealing they have raised prices by 27-39% compared to the previous year.

Technology can help support businesses and help reduce the pressures caused by current economic conditions. Operators that we surveyed believe technology is helping them save money on overheads (39%), improve the customer service (33%) and overall operational efficiency (33%). Whether it's through artificial intelligence, online booking systems, POS terminals or QR codes, hospitality businesses must leverage technology to improve processes, increase efficiency and save on costs and time.

Thriving in 2024

Serving a high quality standard of food and drink will always be the foundation for what makes a good bar, cafe or restaurant. However, as our data shows, consumers in 2024 expect more than this. From a customer perspective, it's important businesses really know and understand what their audience wants, both from a product and service standpoint but also around wider ethical practices. A shift to further tech adoption will help reduce costs and free up hospitality leaders to implement what customers are expecting from them.

The recipe for success for Australian hospitality businesses should be based on knowing your customer, sustainability and technology. Having these key ingredients will ensure operators will thrive in 2024.